Blog with MAE Capital

Real Estate Outlook 2023

January 11th, 2023 10:13 AM by Gregg Mower

As I sit here and write this article I can’t help to reflect on the state of our great nation and quite possibly the whole world.  America has always been the country people look up to across the world and the world’s economic leader.  In the last 2 years, we have suffered through the fear of COVID and been basically forced to get vaccinated, we have opened our borders to everyone including criminals, and we have elected a man that can barely remember where he is at any given time who believes that his administration can spend their way out of the inflation they caused by giving away our money.  The same President has strong ties to Ukraine in ways we should have known about before he was elected and since his election, he has paid closer attention to their borders than our own.  This is the same President that closed the Keystone pipeline and canceled leases for domestic oil production and sent oil prices to all-time highs further deepening the inflation.    Then we find out recently that the CIA actually killed JFK and we get no response from the American people.  Elon Musk exposes that the government suppressed Americans’ freedom of speech ( the first amendment) and no one seems to care.  We know the mainstream media is controlled by the government and suppresses stories that Americans should know about, and again no one seems to care.  We know, for sure, that Hunter Biden brokered deals to China, Ukraine, and other countries for monetary gains to both him and his dad Joe Biden and yet no traction, no one seems to care. These same people are fleecing Americans' and bad-mouthing, impeaching, shaming, canceling, and more to those that have opposing views and we are supposed to be alright with that.  So as I write this I wonder who really is going to care about an economy they have helped to create.  I know that some of you that will read this are on the same page as the author who is fed up with the failed social experiment.   I can only write from what I see and I don’t sugarcoat anything to protect your feelings the facts are the facts from a 40-year view point in the Real Estate and Mortgage industry.

So here it is, Real Estate for 2023 is going to be a buyer’s market, meaning that it is going be tough to find home buyers as interest rates are at 20-year highs.  The outlook for interest rates is that the will continue to rise as inflation will not slow down with the government continuing to spend taxpayers money frivolously.   Oil prices will remain high as domestic production will remain low and foreign dependence will continue to grow.  The government will also be implementing tax hikes to help offset their spending.  The previous congress just passed a budget that is larger than the current income the government is receiving from taxpayers thus we will have a significant gain to the national debt.  This will not slow inflation, in fact, it will do the opposite.     As inflation numbers stay around double digits the Federal Reserve will continue to raise interest rates until the economy is firmly in a recession.

Unfortunately, with higher interest rates less people will be able to afford the current prices of housing so the demand for people to sell and move up will be greatly diminished.   First-time homebuyers will still be priced out of the market last year by high prices this year by high interest rates and inflation.  There will be Real Estate buyers out there that will persevere in buying a home but that number will be significantly lower than the last several years.  I see home prices coming down 10-20% from the highs of March of 2022.  This will be good for potential home buyers, however, sellers will be a little less apt to sell their homes  There will be a lower amount of people doing home improvements in 2023 as they probably did it during the COVID years of 2020 and 2021 when interest rates were lower.   Home builders will have to lower prices on their new builds as demand has dropped off so significantly.  So if you are in the market to buy a home in 2023 you will have many choices and you will get the best of everything available to you to keep your business, at least at MAE Capital we will treat you like Royalty.   

In 2023 potential home sellers will have to be prepared to fix their property up before they sell, to get the high end of the market and or be prepared to make concessions like paying for a buyer’s closing costs and buydowns, and being flexible on the price.   For those home buyers that can’t afford to fix up their property they should be prepared to be on the low end of the market, meaning that if the same house fixed up sells for one price the fixer house will be significantly lower than the ones that have been fixed up.   This will bring opportunity for investor to come into the market for fix and flips again.  In fact, this segment of the market, Fix and Flip, will start making a come back in 2023 with money being tight.  Generally, when the market shifts to slower investors can again find opportunities when homeowners become distressed they tend to sell off their property to live and investors can step in a make big gains if done properly.  So, a shining light in 2023 could very well be investors getting back in the game.  At MAE Capital Mortgage we have all the investor programs needed to be successful with our Private Money division.  

The outlook of the Real Estate market for 2023 is not a real good one but for those that can find the opportunities amidst the adversity will be successful.  If you are in the Real Estate industry you will have to be working harder than ever to get the good word out to consumers.  The people on the mortgage side of the industry will have to be working extra hard and will have to diversify or die.  There will be consolidation in the mortgage industry so you will see companies go out of business or merge with other companies.  There will be a whole lot less mortgage Loan Officers as they go on to different jobs to survive.   As a whole with Realtors, Loan Officers, and Title companies there will be a consolidation and a shrinking of those employed in the industry.  As this happens we begin to see all the peripheral businesses also laying off and consolidating.  This will bring the whole economy down and probably a recession if we are not in one currently as write this.  A Recession by definition is a dropping Gross Domestic Product (GDP) in 2 consecutive quarters.  Since Real Estate and Tech has driven the economy since America has outsourced most of our manufacturing, both industries are not thriving currently so the effects on other industries will be felt soon.  I do not want to be negative, in fact I would much prefer to stay on the positive but when talking about the economy and all the indicators I can’t help but to see negative, however, it won’t last forever. We all must pay closer attention to the economy and stay away from social issues in 2023.  We have to work harder, we have to be advocates for our economy not other countries and believe that our economy is the most important economy in the world.  We will make it through this as we always do so be patient and kind and work hard and help others when you can.  Most of all remember MAE Capital Real Estate and Loan is here for all of your Real Estate and mortgage needs saving our clients money in every transaction.   

Posted by Gregg Mower on January 11th, 2023 10:13 AM



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